How HTC's Product Strategy Is Impacting Financial Performance

On top of all this, rumors have begun circulating that HTC is launching a new flagship phone, the HTC 02. Purported to have all the bells and whistles previous iterations lacked, these “rumors” can be a double edge sword. On one hand, delivering what consumers have been asking for is a step in the right direction. However, should the phone fail to materialize or fall short of expectations, it will be another black eye that will be difficult to recover from.

The fact is that none of this really makes any sense. Releasing that many "flagship" phones in such a short time span, and without the features that customers really want, is a surefire way to come off as a cheap option regardless of the price point. The plastic build One phone is also causing a case of multiple personality disorder. How can you sell a phone at a high price point with a build that screams low-end?

How HTC's product strategy is affecting its financial performance

HTC's product strategy is in complete disarray, and it's showing up in the company's financial statements. According to a Q2 2015 release, HTC took a $252 million operating loss on revenue of $1.042 billion. To be fair, all manufacturers in the Android space seem to be slumping, but what sets the others apart is a clear product strategy - when you buy a Samsung Galaxy S, or an LG G, you know you're getting the flagship product. That's not the case with HTC's products.

TechCrunch reported that HTC's CFO and president of global sales Chialin Chang believes that consumers aren't buying from HTC because they "prefer more fashionable phones." Given what we know about the lack of evolution between new One model releases, this is hardly a surprise - HTC has essentially come out with the same phone each time.

What can HTC do to right the ship?

Chang added that HTC's strategy for a turnaround involves a heavy dose of diversification of its product portfolio. The company is investing heavily in virtual reality software and new headsets that will - if all goes according to plan - give the company a "first mover" advantage in this potentially lucrative space. HTC is also making a play in the wearables space, partnering with Under Armour for a fitness tracker, while the smartwatch category could also be a way forward for HTC.

But before any of that can take place, HTC should slow down and be more judicious with its product development. Customers clearly aren't responding well to the phones that HTC is releasing, and it seems that the company is just turning the other cheek while its sales plummet. With so much customer data available to companies these days, HTC could benefit from pumping the brakes and taking a more data-driven approach.

In consumer products, it's all about who can rack up the most new product wins in a competitive marketplace. As an investor in this sector, you should always be asking yourself who's doing the most to mitigate product launch risks and increase their batting average when it comes to getting it right. Consumers have more power than ever, and if a company is ignoring what they're hearing from the market, you can bet they - and you - will be eating significant losses.